In this news, we discuss the ‘All eyes on Tuesday’ as even risk-hungry retail traders pause.
SINGAPORE / BANGKOK (Reuters) – Asian retail traders cut exposure to China ahead of Tuesday’s US election, lifting short bets on US stocks and retaining liquidity, brokers say, as even some of the investors the most risk-tolerant are cautious.
The novices, who began trading during the lockdowns, made aggressive buying this year when many Wall Street advisers called for caution.
UBS analysts believe, at least in Southeast Asia, that they are now a big enough force to move the markets. Their brokers say they are bracing for short-term risks, despite a consensus in favor of a Joe Biden victory and a market rally.
“People position themselves based on what they believe to be an outcome,” said Chris Brankin, managing director of TD Ameritrade in Singapore, who noted a “hint of skepticism” among his clients around polls with Biden leading the way. .
“These aren’t mass exit positions… it’s more of a break for risk,” he said. “And all eyes are on Tuesday.”
He said that Donald Trump’s chance of victory was partly reflected in a slight reduction in exposure to Chinese companies and the purchase of oil company Exxon Mobil Corp XOM.N.
Chinese companies are seen as vulnerable to Sino-U.S. Tensions if the less predictable Trump is re-elected. Energy companies could benefit from tax cuts.
Other brokers have reported a similar caution. In Australia, retail broker CommSec said there have been recent purchases of BEAR ETF BEAR.AX from Betashares, which wins when stocks fall, and fall protection options. IG Markets said clients are long in U.S. dollars in case a disputed outcome causes market turbulence.
“Right now, I own 30% of shares and the rest in cash ready to be invested,” said Watchara Kaewsawang, a large Thai investor. “I delayed my investment to wait to see the US election and our domestic politics.”
All this dry powder could mean small Asian investors are ready to dive in if the uncertainty dissipates.
“This (risk reduction) probably started at the end of September and is continuing,” said Adam Reynolds, Asia Pacific CEO of Saxo Capital Markets in Singapore. “I imagine there will be a rush if we get a decisive election result.”
Reporting by Tom Westbrook in Singapore and Satawasin Staporncharnchai in Bangkok; additional reporting by Orathai Sriring in Bankgkok; edited by Larry King.
Original © Thomson Reuters
Originally posted 2020-11-03 01:06:11.